Bitcoin miner Bitfarms is trying to reduce its debt burden by repaying loan facilities to reduce interest costs and free up collateral as the crypto market downturn puts miners’ balance sheets under pressure.
The company repaid $15 million of a bitcoin-backed loan facility, possibly the one signed with NYDIG in June, reducing the outstanding value to $23 million and reducing interest expense by $2 million annualized. It also renegotiated the collateral requirement to release $5 million worth of bitcoin and extended the maturity until December 29, the company said in a statement Monday. The miner repaid $12 million in term debt secured by the equipment.
Miners have suffered as bitcoin’s decline in value has squeezed profit margins, making cash flow and debt the main determinants of their survival. Big companies like Core Scientific (CORZ) and Argo Blockchain (ARBK) said they were in a cash crunch, with Core suspend payments linked to financing at the end of October and the beginning of November. One of the largest hosting companies, Compute North, filed for bankruptcy in September.
Bitfarms said it has raised $15 million through a market equity program since the start of the third quarter and expects an additional $3.5 million in cash by the end of the year thanks to the sale of a bitcoin mining site.
The company reduced the cash cost of producing one bitcoin to $14,300 in the third quarter from $17,000 in the second. It reported a net loss of $85 million for the quarter, as its profit margin narrowed to 52%.
Bitfarms sold 2,595 BTC for $56 million throughout the quarter. The miner has been selling bitcoin steadily since June, shifting its hodl strategy — or sticking to what it’s mining — in order to weather market headwinds.